Whitman: Okay, I'm going to get it started. There may be some people that are going to join us here in a minute. I know there're many of you listening to it in -- throughout the cable system also.

But good afternoon, and thank you for joining us today. Today we have with us two key members of the Business Initiatives Council, Lieutenant General Joe Wehrle, who is the current chairman of the executive steering committee of the Business Initiatives Council -- or sometimes referred to as BIC -- and Mr. Ron Orr, who is the chairman of the executive directors. Both the Senior Executive Council and its subordinate council, the Business Initiatives Council, were created back in June of 2001 by Secretary Rumsfeld. The BIC is comprised of the service secretaries, several undersecretaries, and the vice chairman of the Joint Chiefs of Staff, and is chaired by Undersecretary of Defense for Acquisition, Technology and Logistics Mr. Pete Aldridge.

Their goal is to improve business operations by identifying and implementing savings initiatives, with the added benefit that the services are able to retain and reallocate those funds for their own high-priority programs.

The BIC responsibilities were initially handled by the Navy during the first phase, and they were -- handed over those responsibilities to the Air Force on the 1st of October. That's why today the press conference is being conducted here by the Air Force. And at the end of this month, the Air Force will in turn transfer the lead service responsibilities over to the Army.

Today General Wehrle and Mr. Orr will bring you up to date on the progress that the BIC has made on four new initiatives, as well as answer any questions on all 32, if you have any questions on those.

So, gentlemen?

Wehrle: Thank you, Bryan. Good afternoon. Great to see you. I'd like to thank you for attending and giving us the opportunity to meet with you and bring you up to date on the exciting time for all of us in the Air Force, but also on the Business Initiative Council, those of us in the Pentagon and throughout the Department of Defense.

As Bryan mentioned, the secretary of Defense challenged the service secretaries and therefore challenged us and the departments to look at the best business practices within the Department of Defense. I have to admit to you that when the BIC first stood up, I was a bit skeptical because I've had some serious doubts. I have had painful experiences with past initiatives, and some of those initiatives met with what we would call dubious success. But that's not the case here.

The strength of this effort is, first, the close relationship between the service secretaries, Secretary Aldridge, General Pace, Dr. Chu and Dr. Zakheim, and their experience in and out of the Department of Defense with business practices and processes, and their understanding that some of the obstacles that we thought were insurmountable really might not be.

So I believe we've created a really refreshing environment here for us to tackle these obstacles as they come upon us, and to remind you, the goals for the BIC are: number one, identifying better and smarter ways to do business; finding ways to reduce cost; and eliminating duplicative processes.

As Bryan also mentioned, an important ground rule -- and I can't stress this enough -- the big incentive that makes this process different than all the others is that any savings that the services identify through their BIC initiatives will be retained by them, so they can reallocate the monies to higher priorities within their own portfolio.

It's important to note, however, that it just isn't money; it's also other things, such as reduced cycle time, streamlined processes, accelerated decision-making, and things such as that that help us do our job better and quicker.

Secretary Aldridge gave us specific direction to be action- focused and to look broadly across the Department of Defense to identify good ideas anywhere they are and get them implemented. And I'm here to tell you today that I think we've done a very good job at doing that.

This effort is not downward directed. It is not Secretary Aldridge and the secretary saying, "You're going to do this and you're going to do that." So it has great buy-in from the field. It's ideas that we've collected from the field and then we've elevated, because we found out over time that the people that understand our question, "Why are we doing what we're doing?" is usually the person that's turning the wrench and not somebody that's stationed up here at the Pentagon.

The secretaries have brought the services together in a very congenial atmosphere. Their intense interest was dramatically shown to us when they scheduled the first BIC meeting for September 14th. Obviously, they weren't aware of what was going to happen on September 11th. They all went over to the memorial service and they all made it back for the first BIC meeting. And that impressed us that this, in fact, is different than many of the other attempts we've made in the past. So therefore, we're going after every good idea, leaving nothing off the table, and we're focused on the spiral development process, where we take and implement one idea and then develop spin-offs from that same initiative.

Today we're going to update you on some of the initiatives that we briefed during the first press conference, or that the Navy briefed during the first press conference, and we're going to talk about some other recent initiatives that you might find interesting. Finally, we're going to give you an idea where the BIC is headed and the planned April hand-off to the United States Army.

During the phase of which the Air Force had the lead, the most recent phase, we focused on exploration of long-term initiatives and also began implementation of those initiatives that were approved during the first phase, and then we continue to reach out for good ideas from the field.

I'm now going to turn the podium over to Ron Orr, who is going to give you an update on the status of the initiatives approved during the first round and brief you on a couple of new ones approved from the last three rounds. And then we're going to answer some questions.

Ron?

Orr: Thank you, General Wehrle.

Good afternoon. As mentioned earlier, I am currently the chairman of the executive directors to the BIC while the Air Force has the lead.

At the first press conference, the Navy briefed you on three of the 10 initiatives approved on the first cycle. They were recovery auditing, Web-based or electronic invoicing and receipting, and enterprise software initiatives. Since then, we've been on the move to implement these and to sum up with other initiatives.

Recovery auditing involves the use of contract contingency-fee audit services to identify and recover overpayments for goods and services that were paid for with working capital funds. This initiative is on schedule. The Navy's issued a request for information to establish [the means by which] we're going to do contracting on this, and the current schedule calls for implementation by the end of this fiscal year.

Web-based or electronic invoicing and receipt processing addresses a manual process that we have right now for receiving goods and processing invoices. With the manual process, you end up with multiple data keying and keypunching, which drives error rates up. And we intend to implement this initiative to improve the cycle time and reduce errors. The system has been jointly developed through a partnership of the defense agencies and all of the services. All the services have agreed on the approach. And based on the August 2002 software release, we'll be able to implement this during this fiscal year, with benefits beginning in next fiscal year.

Enterprise software initiative is the initiative, which will streamline our acquisition process for procuring commercially available software through bulk-buying approach to achieve volume savings by Defense-wide, rather than by individual, programs or services. The service secretaries provided funding to develop a DOD-wide software asset-management process that will enhance the DOD current enterprise software initiative Web site.

There -- that's where we are on this initiative that we've discussed since the last press conference -- that were discussed then. Let me talk about some more. There were seven during -- additional ones -- during the first round, and since then, we've approved 22 others. And I'll go through a few examples.

One is virtual IT marketplace, and this is where we build off the Enterprise Software Initiative. And what we are doing here is, the BIC approved the establishment of virtual enterprise technology marketplace for online purchasing of software and hardware and support services. We'll team with the General Services Administration for implementation, and as part of this initiative, we are currently negotiating agreements for DOD-wide licensing on server and desktop products with various companies. We expect from this to garner savings from this bulk buying, as opposed to individual buying.

Cell phone minute pooling is one where we -- is another initiative. As many of you know, as the cell phone industry matures, there are many opportunities to take advantage of some of the great deals and manage this service more smartly within the department. What we're trying to do here is to negotiate lower-priced contracts by consolidating cell phone users in the appropriate pools. Let me give an example: I don't travel very often, and so even though I need to be in contact often 24 hours a day, I don't use up all the cellphone minutes that are assigned to me. General Wehrle, who travels a little more, may at times exceed his allotment. What we want to do is pool, just like we do in families, and have savings. We're going to begin to work this in two regions where we have a large military presence and could save considerable taxpayer dollars.

We're also looking at streamlining information technology equipment-disposal process. We have a laborious process that we use as we dispose of excess information-technology equipment. Right now we have two different processes -- one for IT equipment and one for every other piece of equipment we have in the military. And each of these processes is managed by two different agencies. What we'll hope to do here is consolidate those processes into one and gain efficiencies.

We're also looking at continuing education and looking how we can optimize professional continuing education. In this initiative, we're taking -- first I'd like to define -- professional continuing education is those non-degree-granting courses that are 20 weeks or less, that are non-service-specific and taught by more than one service. Let me give you an example. All the services have a formal instructors' course offered at four different locations. What we'd like to do is look at these types of situations and consolidate the training at one location, as appropriate. This is very similar to the multi-service consolidation and streamlining of technology training that all of the services worked in the early '90s, which granted us many efficiencies.

That's where we are right now. We have 32 initiatives. But an important point I'd like to make here is that after the initiatives are approved, we do establish a firm implementation plan for each of the initiatives. Part of this plan is to set milestones and metrics, which we use to measure the effectiveness of reform, and we consistently track our progress on the milestones outlined in the implementation plans. What we want to do is not just approve initiatives, but actually implement them.

One thing that we will avoid, however, is taking the anticipated savings before they are accumulated. This is a mistake we often made in the past, where we took a certain amount of savings and then, when the savings did not materialize, we ended up robbing from and breaking other programs to cover the deficit. We don't want to disincentivize the services and disincentivize initiatives. The services will be the ones to harvest the savings and decide where to reap the benefits.

Another key point is the fact that we are not looking to duplicate other efforts already under way by other working groups. What we always try to do is leverage those existing groups and synergize our efforts so that we can expedite the implementation of our collective goals.

We have many others that we are calling emerging initiatives, that we're looking at right now, some of these including streamlining our contract closeout process, looking at improving our supply chain management. All of the services, OSD, and Joint Staff have all put all -- a call for more initiative to their subordinate commands, to try to get more initiative and better ideas. This is a living process, and we realize successes will generate more ideas and more successes.

While some of the approved initiatives right now are rather modest in terms of savings, we expect bigger initiatives and bigger savings into the future.

And now I'll turn the podium back over to General Wehrle.

Wehrle: Thanks, Ron.

As you recall, the BIC is managed in phases. In our responsibilities as the service lead, we're going to hand this over to the Army at the end of the month.

Before we get to questions, I would like to publicly thank the services, OSD, and the Joint Staff for their tremendous cooperation and support during this phase. BIC is truly a team effort and has proven to be a great way to expedite decision-making and focus our senior leaders' attention on some important issues that we all have. And as stated earlier, BIC has really been a big hit with the secretaries, who have been very, very strong supporters of the process and are in their own way business-smart, and they bring that to the table, which we truly enjoy. And it's our goal to continue to implement the best business practices, and through this process become even better stewards of the taxpayers' money.

At this point we'll be happy to answer any questions that you have regarding the BIC and any of the issues we've discussed.

Q: How much money do you hope to save for the four initiatives just talked about? I know you --

Orr: Over the 32 that we've identified, we expect about -- a little over a billion dollars over the next six years in savings.

Q: Can you break that down into the individual ones or --

Orr: I can give you that for the record. I don't have all the savings here in front of me at this point.

Wehrle: Again, I'd like to reiterate, before we get to the next question, that it's kind of a habit in this town that in fact if you anticipate a billion savings, they want to see where it is in your budget, and that mistake is made. And from a budgeteer standpoint, that's called a negative wedge, and that's not smart, because if the savings don't materialize for one reason or another, or you think you've got it locked and all of a sudden there's a law to prevent you from doing it, now you've got to break programs to be able to fill that deficit.

So it's very important that we make that point -- reiterate that point, because that's what keeps the initiative going for the services, is that when the money arrives and they don't have to spend it on the areas that they had before, then they can take that and reinvest it as they want to.

Q: Can I just follow up on that point? The first list had sort of estimated savings of the initial programs. The follow-on lists have not had. Is that something you're moving away from because of those concerns, or they're just not --

Wehrle: No, no -- I'm sorry.

Orr: What we've intended to do is come up with a pretty wide range when we tried to do the actual savings and estimating. So what we've tended to do now is wait until we can get a better handle through the implementation plan of the specific savings. And so we haven't put out the savings on the additional initiatives at this point simply because we have a group going in and looking at each one and trying to come up with a better estimate and give a better professional look at what the savings will be on each initiative.

And the key, the important thing is, is that we've got a good handle on the fact that they are savings and they do improve and have other benefits -- reduced cycle time is important; improved morale of our work force when they don't have to do a dumb action or make a report in that's unnecessary. So we feel that as long as it's moving in the right direction, the amount of savings we can identify as we get further down the road and as the services decide they're going to harvest the savings.

Q: In your press release, you say one of the initiatives is to streamline the requirements for technology assessments, readiness assessments.

Orr: Yes.

Q: What's that about?

Orr: Currently, we have a requirement and policy to do a technology readiness assessment as you look at the technologies, when you put in a, say, modification or buy a new piece of equipment. A good example may be on the C-5, when we looked at re-engineing the C-5, there was a requirement to do a technology readiness assessment on the engines because of the policy. When you really looked at it, it was a commercial engine. There was no reason to do that type of readiness assessment. What we needed to do was just move into the integration and bring it into the C-5.

So we're trying to do a step back, re-look at that policy and saying what actions is it driving? Is it driving more of these readiness assessments than we need to do? How can we partner better with the technologists in our research and engineering areas and revise the policy to make it more common sense and not do readiness assessments where they're unneeded?

Q: So is that comparable to commercial acquisitions versus military acquisitions?

Orr: That is one of the areas overall that we're looking at is how can we do a better job of doing acquisition more like the commercial industry. This is one of them that came up as part of that discussion.

Q: Where can I get more information, detailed information on your new -- the Air Force's new [unintelligible]? And also, can you give a little bit more detail about your cell phone plan; which two communities you're planning on using as beta sites?

Orr: Right, now -- first I'll answer the second one, in terms of cell phone pooling, we're looking at the Tidewater area, the Norfolk, Virginia, area, and we're looking at the San Antonio area right now and seeing where that would best fit in to those two areas.

In terms of additional information, it is on the -- they are on the Web.

Q: (Off mike.)

Orr: We'll get that to you. We'll put them on the link here, and -- which will give you a short -- the information on each one of the initiatives.

Q: That'll be good.

Wehrle: You know, Ron mentioned earlier, it comes to mind, about, you know, one of our big fears that all of us as young officers used to have is that we were filing a report and we had to do it every month, and we never knew where it went. Well, we found some of those. And then we went to the people who got them and we said, "What do you do with them?" "Well, we just put them in this drawer." "Does anybody read it?" "No." "Well, then, why are we doing it?"

I mean, just little things like that that you might not think means a lot, but it sure means a lot to the guy who -- or the guy who has to do the report every month. And so we're going through those types of things.

Yes.

Q: This is a process question. Is part of your function to review non-core, what you might consider non-core functions in the Air Force? Is that part of the BICs process?

Wehrle: Well, this is kind of -- it's tied into the A-76 issue that you may or may not have been reading about, where we have gone back to Office of Management and Budget and said -- in fact, General -- or Mr. Aldridge, Secretary Aldridge went back I think the end of -- middle of December, so went back over and said, "You know, there's ways to become efficient in realizing savings, and A-76 isn't the only way to do it. There's other things that we can do, like competitive sourcing and reengineering, divestiture, privatization, public partnership with the private sector. And in that," he said, "what we're going to do, the first thing we need to do is we need to take a look at every position in the services" -- and all the services are doing this right now -- "of what's core and what's non-core." Those that are core, that we absolutely have to have to include the rotation base that we need for the current conflict and what we anticipate in the future -- for example, Air-Force speaking, people need to wear this uniform -- we need to make sure that there is somebody wearing that uniform that can accomplish that mission.

There are some that are non-core. The way I look at it is if you can find locations where there's a lot of people with the same specialty doing the same thing and they don't deploy anywhere, and it can be done by people on the outside, that ought to be a candidate for finding somebody on the outside that we can contract with to do that, and then we can take the people wearing this uniform and get them back into the field.

I think those are pretty easy. The one that's hard is the one that's in the middle, the one that's in the middle that some people will say is core and some people are saying is non-core.

It's a long answer, but each of the services is doing that right now.

Q: Just a follow-up. Could you give me, like, a hypothetical example or an example that the Air Force has found of a non-core piece of business that's very easy to identify and one that's not easy to identify?

Wehrle: One that we're proposing to identify is the Air Force Pentagon Communications Agency here in the building. We've got airmen and officers in this building who are computer experts. And in fact, we're offering that up as a possibility for us to go out and see -- maybe we can work a contract with somebody who can do that from the outside, and we can take these young men and women and bring them back out in the field. Obviously, on the core side, you probably don't want to hire a pilot to fly an airplane. You probably need to have security forces to protect yourselves overseas and in the States. We're kind of looking at that. So we're going through that.

And in fact -- I can speak from the Air Force -- we are going -- I think we're in about a third or fourth meeting. I will tell you, it's hard, because everybody is saying, "Oh, no, I've got to have somebody wearing a uniform to do it." Well, everything is on the table.

Orr: I think one of the important issues here too is that we tend to concentrate on only the non-core and say, you know, what are you going to do with that? But even in the core areas, we can do some reengineering. We can do it cheaper, we can do it better. And so we need to take a look at some of those areas also and look at the process and say, can we make savings?

And they may not be manpower savings. The example I gave earlier about, you know, DOD-wide software buys, there are significant savings potential there. It doesn't mean we reduce any manpower; it may mean we hire a few manpower people to do the job and to do the contracting. So the emphasis isn't just on manpower. The emphasis should be on total savings and improved output to the warfighter.

Q: Can I just follow-up on his question and your comment? One of things that's implicit in the A-76 process is this competition between the folks who are doing it now and the commercial sector. How do you guys address that when you're dealing with -- like the Air Force communication folks, how do you deal with that kind of allowing the folks who are doing it now to compete for the work?

Wehrle: Well, competition just isn't between the public and private sector. Can't you have competition between two companies that can do that business? I mean, that's the way most businesses do it. A-76, quite frankly, is a competition to get people wearing the uniform out of the business, and it's a competition between the DOD civilians and the private sector. So competition can be done many ways.

For example, I'll tell you that A-76 programs -- our history, A-76 programs usually takes a minimum of two years to complete. And right now we do -- it's like reinventing the wheel every single time. You know, if we've done that on three or four bases and we know, for example, if the DOD civilians have a really good metric or template of becoming efficient on this base and the base we're about to A-76, or we're thinking of trying to get efficient, looks exactly like that base -- they've got support groups and they've got medical and stuff like that -- we say, "Wait a minute. Why are we reinventing the wheel and doing it? Why don't we just take this template and apply it to this new base and get the savings earlier, rather than wait for two years?"

Orr: The bottom line is, if they've got processes where the government employees have won two or three times, why aren't we spreading that across the Air Force immediately? You know, do we even need to continue to compete, if that's -- instead of going through individual A-76 process each time, in that case.

So we're going to have some activities like that where we can take that reengineering and just apply it and move on.

Wehrle: But I'd like to add one last point - - that it's not saying that A-76 doesn't work. It works in some cases. So A-76 is one of the processes we need to consider as we take a look at some type of functions and say, "We need to become more efficient here." Maybe A-76 competition is the way to do it. We've had examples of public-private cooperation where DOD civilians and a public company have gotten together, and that's worked out pretty well, too.

So each service is coming up with ideas, and what we're asking OMB is to give us an opportunity to become efficient in any kind of way; whatever the best way is to become efficient, that's what we want to do.

Orr: Other questions?

Yes, sir?

Q: Have you seen any financial returns from some of the original initiatives or are they still in the phase where you're making changes and you'll get the results later?

Orr: I don't see anywhere I can identify specific financial returns. We didn't expect many this year. We expected that we'd start seeing it in next fiscal year.

So that's when we should first see our savings. Right now we're -- it's a matter of doing some investments in some cases. It's kind of interesting: When we decided to do investments, we came up with a process that said that each secretary will share the cost and come up with the money. So we've all come in, we've put up our money, and I think the first one really comes into being about August of this year.

Q: And what is the up-front cost to do --?

Wehrle: Right now we've only had about -- I'm going to say it's about $4 million in investment in up-front costs -- mainly in software expenses.

Q: Do you have a target --

Sorry. Go ahead.

Q: I was just going to ask you, is privatization of utilities at the base level in your portfolio, or is that more of a service thing?

Wehrle: No, it's not. The utilities privatization is being worked by Mr. DuBois with the services as a separate initiative. We're not involved in the utilities privatization.

Q: Do you have a target range of the number of goals? And how many can you guys just oversee? What's the relationship between the oversight --

Orr: We haven't identified a number, but we've done -- in terms of overseeing the implementation, you know, it's hard enough to get things initiated sometimes in the department. What's even harder is actually getting 'em institutionalized.

And so we've established a process that -- and a champion on each one of these that's not necessarily in the BIC process. The champion may be someone in the comptroller's office; it may be someone in the Air Force. And we are holding them responsible for continuing the implementation, which means that the people working in the BIC all need to be looking at them occasionally, once they get up and running. And we've asked each of the service secretaries and assistant secretaries to be responsible for seeing that they get implemented, and eventually they'll be the ones reporting back, not through the -- necessarily -- the BIC process.

So we have established a process. That is a concern of ensuring that they actually get implemented. And we've put a number of people, I say it's the champions -- and say, "You're in charge. Make sure it happens. And we'll be following up with you."

Wehrle: If I can add on that: Every BIC meeting, the first thing that the executive director -- in this past few months it's been Ron -- talks about when the service secretaries, Mr. Aldridge and all of the BIC members are there, he says "Let me review, starting with the first initiative," and they have 'em all down there. And we use a simplified stoplight chart. It's in the green. That meant this thing is going; it's implemented. The champions got it. It's making good progress according to the way the champion wants to do it. Yellow and red obviously -- most all of the ones from the first ones are in the green, and we do that and review that every time. Now theoretically, 10 years from now, they're probably not going to be doing that. But right now, it's well within our capability to keep track of it.

Now how do you -- you might ask, "Well, how are the champions identified?" Well, for example, an issue might come in that the Army has picked up on and said "We would like -- we think this is really something we ought to change, and it's going to either give us more money, improve the process or decision time" or something. If in fact it makes it through the filtering process, and it gets up to the BIC, and they say, "Yea, verily that's what we want to do," then we assign the champion to the Army.

Q: And how do you get the ideas in the first place? I know the first time there was a sort of agency-wide announcement.

Orr: We did an agency-wide announcement. We're doing that -- we're doing that again. We also went out and looked at all of the reports. We've had a lot of advice over the last five to eight years, and we went out and looked at all that advice for the last -- and said, you know, what has the Defense Science Board said, what has the Scientific Advisory Board -- what kind of -- what has BENS and other organizations -- and we've gone out and looked at that, and we picked up some initiatives from there. And we have more that we'll do in that fashion.

Wehrle: I'll give you another example. Ron had mentioned in his remarks about how we find out other organizations that are doing something, and we kind of blend with them. One occurred just recently, where we have a program where we send officers from all the services out to industry leaders. And it's been going on for many, many years. And they go out for -- it's like their senior service school, and they go out and they work for, for example, Northrop Grumman or Boeing or something for a year, and they try to pick up on the best business practices of that particular company. And then they file a report. They say, "Hey, this is what I learned."

Well, the guy who came and saw me says, "I got a lot of these reports." And we said, "Well, give us the reports, because we want to go over every one of them and find out, is there any gems in there of things that we can do in the Department of Defense to help us?"

So I think -- I mean, it's a great program, but now they have a vehicle. And in fact what we've asked them to do is, at the end of their tour, they're going to come in and brief the BIC executive directors and say, "Okay, I just came from Boeing, I just came from Northrop Grumman, and this is what I learned." And if something catches our eye that we haven't thought of before, something new, then we're going to turn that into a BIC initiative and run it through the system.

Q: Are you guys using FAIR Act inventories as well, that sort of delineate governmental and nongovernmental?

Orr: Not during -- not as part of this process, no.

Yes, sir?

Q: I was told that one of the BIC members wrote an article for -- I think it was the Army engineers, retired engineers, about using employee stock ownership plans as a possible tool in privatization or to help with the privatization part.

Orr: Yes. Yes.

Q: Could you elaborate a little bit on that, or is -- how that would work?

Wehrle: The -- I think there's -- we have an example, and I think it's the folks that are doing -- I can get back to you, but I think it's the folks who are doing security --

Orr: The OPM --

Wehrle: OPM.

Orr: -- that's doing the security investigation -- did it that way. What it is -- as Joe mentioned earlier, there's a number of alternates to A-76 that we need to look at. That is one potential alternate. What -- we have not identified a place at this point that it applies, but it's one of the alternates. We step back, and we are trying to research a little more the legal and legislative issues involved with that, how it was done in other locations, and whether that makes sense or not. And it's just one of those tools we want to bring to the table.

Wehrle: And what we've done in the Air Force is we went out and briefed these alternatives to A-76 to our four star generals. And we said, "As you go through and you're looking for efficiencies --" because now they know, right, they can keep the money; in fact they're going through -- here are some alternatives that you can look at, and we have people within the Air Force standing by that if they say, "Hey, I've got something here that I think we can get efficient on," and then we go out there and we help them and we look at these alternatives and say, "Well, this one might fit." And in fact, it could very well be exactly what you said.

So we haven't identified one right now, but this just came up recently and our leadership is taking a look at a lot of those things.

I know the other services are doing the same.

Q: Is there a relationship between the work that you guys are doing and sort of the larger DoD transformation efforts?

Orr: I would say yes, and I'd put it in a different fashion. The Senior Executive Council, which is chaired by the secretary of Defense, the BIC is within that and falls within that and is chartered by them. They've identified areas that they believe need transformation. Military education is an example of that. We've brought to them several initiatives in military education. They talked about commercializing the acquisition process. We've brought several initiatives. And our goal has been, yes, we know we want to do a transformation, and from the BIC's perspective, what we would try to do is bring in initiatives that move us toward that transformed goal that are implementable in the short term rather than trying to go for a total reengineered, transformed process at this time.

So yes, we've looked at those areas. The secretaries have driven us to look at several of them. And we're bringing in initiatives. So it does fold into the overall transformation effort in that fashion.

Yes.

Q: So when the secretary talks about the need to implement better business practices throughout the Pentagon in order to stem the waste of billions of dollars, are you guys the principle architects of that project?

Orr: I'll never use the word "principle architect."

Q: But you're --

Orr: But that is one of the areas. They have us looking at some of those areas, and we are looking at initiatives. For example, on simply how do we make -- how do we coordinate and make decisions within the department and within OSD? How do we coordinate and staff paperwork, and is there a better ways of doing that? Those are some of the areas that we're looking at. And what is the role of line versus staff responsibilities?

Wehrle: If it usually involves better business practices, it generally comes to us. I can't tell you we're out there begging because we've got tons of stuff to work, but obviously, when they said we'd like you to look at this. And quite frankly, every time we have a BIC meeting, we'll finish up with what has come through our process and we say, "These are things we'd like to consider," and inevitably, one of the service secretaries or Secretary Aldridge says, "You know, I'd like you to take a look at this also." I know I said it wasn't downward directed, but every once in a while, "I'd like you to take a look at this," and we will, and we'll go out and take a look at it. And we're not shy about coming back: Hey, we looked at it, but there's some law or there's some -- or some regulation or something that prevents us from doing it. Or we did an analysis on it, and even though it makes common sense, the savings aren't there, or something like that. I mean, we're not shy of doing that. But we take input from all corners.

Q: And how often do you meet?

Orr: We've met -- we meet about every two months, is about what we've been meeting. We met in December, February and March.

Q: When's your next meeting, then?

Orr: It's scheduled for late in May to early June. The Army is scheduling that meeting at this point.

Q: General, you said you have been skeptical about such efforts in the past. What makes this -- aside from the fact that services can keep the savings that they garner, what makes this different? And you certainly know the culture in this -- the difficulty of changing this organization is not easy.

Wehrle: No, it isn't, but it can be changed, and I think we're starting to see that. Obviously, the first thing -- the most important thing is exactly what you said; it's an incentive for them. If there's no incentive other than being patriotic and saving the taxpayer money, they say, "Yeah, we'd like to do it." But they're really incentivized if they think they can take something that they think they're wasting money on and put it against fixing a house or repairing something on the base or converting it back to the Air Force for some type of a new weapon or something like that. That is primarily the main thing.

The other thing is that -- and I mentioned it before -- from a programmatic standpoint, people put so much pressure on this, they say, well, then, I will tell you when A-76 really started going in the mid-1990s, has been going for quite a few years, but there was a big emphasis in the 1990s, all the services were forced to assume savings: You will do these many studies, and you're going to assume a certain percentage of savings and you'll lay it into your budget.

Now, that -- we fought that. We said, now wait a minute, you know, it might not work; we might not get the savings that we think. Because traditionally an A-76, although it's a long and involved process, it garners about 25 to 30 percent savings. So we were forced to do it. In fact, we were told: You either lay it in, or we're going to take the money when we get our hands on the budget. So you have no choice. So you lay it in, and we had what we called the A-76 negative wedge sitting in there, and we were fighting like heck to try to do these studies, and if it didn't work out and the study was delayed or something like that, because we thought we would do so many a year, then you end up that you're building the budget with this negative wedge. And it just turned everybody off because now we had to break programs that we thought were really valuable to the service to come up with the money because you can't turn in a budget with a negative wedge.

Orr: Let me give you another issue I think is really different. Prior initiatives, whether I look at defense reform initiatives, DMRIs, and come up with all kinds of alphabets about different initiative processes we've gone through, typically the decision has been made at the OSD level, and that decision is made that we're going to do this initiative, it's a good idea, and it's been pretty much dictated that we're going to move that direction. This is totally different.

When you have sitting there all three service secretaries, Secretary Aldridge, the comptroller, and Dr. Chu, and the vice chairman of the Joint Chiefs of Staff and say, "This is a good initiative, go out and do it," it's a world of difference because we go in with a total buy-in. I have -- this is such a collegial group, and as we close the doors and have our people and make our -- look at the initiative and make a decision, no one is shy of giving their opinions. And when we get finished, we sit down and say, "This is a good initiative, who's going to run with this?" And the Army will say, "I'm going to champion this and we're going to make it work," and all the secretaries say, "Let's go do it." That's different than we've done in many of the other reform initiatives we've done in the past. And I can tell you that that makes a difference in terms of its ability to be implemented.

Q: Mr. DuBois and Mr. Aldridge have both -- or I should say Mr. Aldridge and Mr. DuBois have both touted the concept of DOD divesting themselves of infrastructure.

Orr: Yes.

Q: That's come up a lot. How does that fit into BIC? And could you elaborate in general what that means and specifically what that means?

Orr: Well, I'm not going to try to explain Dr. DuBois' -- Ray DuBois' and Secretary Aldridge's -- you know, what they mean by infrastructure. I think what we've been looking at is specific areas that can be called infrastructure. It's the infrastructure that does the training for our people. It's the infrastructure at our installations that provides the housing and utilities and everything else from which people deploy. And that's all considered infrastructure by some people.

We have looked at some of those areas and we continue to look at areas where we can reduce the cost of running that infrastructure, and I think that's what they're talking about. We have not -- I don't even think we've used the word "infrastructure" in our process and say we're going to go after reducing and divesting ourselves of infrastructure. I think some of that discussion has come up when we've talked non-core/core areas and processes, and we'll take a look at some of them, but the BIC hasn't been that involved it that particular area.

Yes, sir?

Q: Are there any kind of like financial incentives for individuals to make suggestions or within the initiative you're starting up now, to allow them to partake in some of those savings --

Orr: I can tell you what we have done in the Air Force. I can only speak for that at this point.

What we've done when an individual has put in an initiative is we've asked them to put it through our Suggestion Program also, so that we have a process that if the savings do come, that we can reward an individual. And so that's what we've done within the Air Force. I can't speak for the other services. And that will give them an opportunity to be rewarded.

Wehrle: I think that's another example of where if an individual had an idea that was so beneficial to the entire Air Force that we would grab on to that, if he goes through the Suggestion Program, they can get monetarily rewarded because there's a vehicle to do that. But we, as the BIC, could grab on to that idea and bring it through the BIC process and then spread that idea to the other services. And I think that's how we try to link to all these other programs that are out there and groups that are trying to become efficient.

Q: I was just wondering, is there anything within the BIC process itself that allows for that?

Wehrle: No.

Orr: No, there is not.

Wehrle: Not for an individual. So I think each service has their own individual thing.

Whitman: Thanks everyone. Thank you very much. Thank you all for coming today.

Wehrle: Thank you. Appreciate it.

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